What is an Individual Pension Plan (IPP)?

An Individual Pension Plan or "IPP" is a great opportunity for entrepreneurs/business owners, generally in their late 40's to early 60's, who have operated a profitable business for a number of years.  Typically, the entrepreneurs will already have income that is taxed at the top tax rate and their company will have taxable income in excess of the small business rate.   The entrepreneur likes the opportunity of sheltering additional income in excess of the traditional RRSP contribution limits, making substantial company contributions (fully-deductible) to the IPP for prior service, through the establishment of a defined benefit pension plan that is also creditor-proof.

An IPP provides pension benefits and other benefits to its eligible 'class' of employees.  IPP's can help even the playing field as RRSP limits do not allow for business owners to contribute as much to their retirement as could some members of pension plans.

Who qualifies for an IPP?
Typically business owners and key executives who are older than age 45.
Professionals operating through a Professional Corporation.
Executives of private and public companies.
The person must receive T4 remuneration from their employer.
Able to maximixe their RRSP contributions.

What are the benefits of an IPP?
Creditor protection for assets in the IPP.
Ability to transfer assets to next generation of family memebers working in the business.
Increased contribution limits.
Deductible to the employer.
Enables corporation to reduce its taxable income down to small business level.
Investment flexibility.
Interest on funds borrowed for IPP contributions are deductible by the company as an expense.
Ability to 'top-up' contributions if investment returns are insufficient to fund promised benefits (unlike RRSP's).
Opportunity to make a tax-deductible lump sum contribution at the time of actual retirement.
Contributions made within 120 days after a corporate year-end deductible in that corporate year. (IPP may be established after corporate year-end.)
Contributions for pre-1998 employment years may be paid immediately or amortized over up to 15 years.
And much more

If you might qualify and are interested in the benefits, you contact us to explore this opportunity more.